In Part 1 of this series, we introduced the concept of Collective Action in fighting corruption and companies’ role in driving this innovative tool forward.
But why should companies engage with other companies, governments, and, where it exists, civil society to combat corruption through Collective Action?
Why should companies invest time and money in raising standards amongst their competitors and in foreign jurisdictions where corruption is apparently embedded in the culture, and where there is a vested interest to preserve the status quo?
The best companies in the world, with fine leadership traditions and a commitment to good governance and management, have a vested interest in seeing these practices being adopted in their industries and in the countries where they invest, not least because they want a level playing field when they compete for business.
But, if they try to go it alone, as proselytising campaigners against corruption, they will soon find themselves up against competitors and regulators who do not share these values. That will put them at a competitive disadvantage in public tenders and bids.
And then of course, there’s always the risk of the rogue employee, who brings the whole public reputation of a company, so carefully cultivated over years, crashing down in a matter of days by some reckless trade or facilitation payment. In the world of anti-corruption, it may be better not to put your head above the parapet, lest it gets knocked off!
So companies need to work collectively – with other companies, and with governments to create a new standard of behaviour. In our experience, as we will show in the next instalment, it takes years of patience to build the trust and confidence to allow such cooperation to take place. Much of the work of Collective Action is below the radar screen – which is one reason why you’ve not heard about it much yet. And it requires third party “brokers” or intermediaries who can help bring parties together and create agendas which will result in impact and action.
Let’s not mince our words: what we are talking about is a wholesale change of culture. One is tempted to point an accusatory finger at the emerging and developing markets where the opportunities of fast growth combined with poor governance, weak institutional foundations and lack of rule of law, provide fertile soil for corruption.
But unfortunately it’s not just there – it’s in the developed world too – look at the banking sector to start, and the sort of values – or lack of them – that led to financial crisis. That culture change needs to happen worldwide. In the next section we will explore how gradually the momentum can be built up for Collective Action which will begin to stimulate that culture change.
Brook Horowitz is CEO of IBLF Global and a member of the IBLF Global board. A graduate of Cambridge and Harvard Universities, he’s a contributor of opinion pieces on raising business standards to the Financial Times, International Herald Tribune, Moscow Times and others.
You may wish also to see the Fighting Corruption through Collective Action Initiative sponsored by the World Bank Institute a few years ago. A lot of time was invested in creating what was, deliberately, a practitioner's manual and not a talk book yet it still failed to achieve traction.
After setting up and running the Enforcement Arm of an Anti Corruption Agency in the Turks & Caicos islands, I would fully endorse the collaborative approach as not only desirable but essential. Any issue of law enforcement requires 'joint working' and co operation to succeed. Public/Private sector engagement especially the Financial service industry is a must, allied to a rigorous compliance regime. Clearly, political will is a crucial part of the public sector approach, and provides a necessary platform for private sector engagement.
Indeed private sector engagement by collective action is critical to combating corruption but this may be hard to achieve in regions with weak law enforcement and governance structures.
One of the principal reasons being in addition to the fact that law enforcement is weak, companies doing business there face little or no public scrutiny. so when it comes down to decision making, in most organizations, increasing revenue and controlling costs is priority unless there is reputational risk but there will be none if there is no public scrutiny.
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